CBC is Speaking of Stock Markets and the Mutual Fund Dealers Association of Canada check this out.

http://www.cbc.ca/news/business/crm2-investment-fee-volatility-1.4561686

Stock market volatility may awaken investors to scrutinize account fees

Rough patch that hit markets in February may force investors to take more notice

The Canadian Press Posted: Mar 04, 2018 12:46 PM ET


47 Comments
Commenting is now closed for this story.



David Amos

Methinks that CBC should at least have reviewed pages 1 and 14 before they blocked the link to an important file so that other Canadians could not read it before the Stock Market tumble again N'esy Pas?

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David Amos

Methinks the dudes who think they understand the Financial Industry should read pages 2 and 13 of this old file of mine

https://www.scribd.com/doc/2718120/integrity-yea-right

 
David Amos
Speaking of Stock Markets and the Mutual Fund Dealers Association of Canada check this out.

https://www.banking.senate.gov/public/index.cfm/hearings?ID=90F8E691-9065-4F8C-A465-72722B47E7F2

November 20, 2003 02:00 PM
The Committee will meet in OPEN SESSION to conduct the second in a series of hearings on the “Review of Current Investigations and Regulatory Actions Regarding the Mutual Fund Industry.”

Methinks folks should ask the Yankees why the transcript and the webcast of that hearing went "Poof'" from the public record about a year before the Stock Markets took a nosedive in 2008 N'esy Pas?


 
Rod Hebner

Banks, like profits which encourages them to find new ways to make profits with other people's money. New ATM's with higher fees or simply go with more service fees and provide less service with higher rates.

Robert Anderson

@Rod Hebner

Buy bank stocks if you believe what you say.

David Amos

@Robert Anderson We do byway of our CPP

 
Ralph Wilkes

Most investment bankers earn millions per year advising the uninformed how to throw themselves to the movers and shakers in the markets who make millions per year, too.

Guess where they get these millions from each year.

David Amos

@Ralph Wilkes Methinks folks should check me out on the Internet if they think I would have to guess at the answer to your rhetorical query N'esy Pas?

 
Pat Evans

However, investors and their advisers had little cause for concern in 2017 as U.S. stocks continued a bull run that began in 2009 and continued into early 2018
_______________________________________________________

This "bull run" happened because The Fed was doing QE all this time.
That makes it all fake to me.

David Amos

@Pat Evans Me Too

 

Jean William

To avoid paying fees on your money, whether invested or held otherwise, you will have to take care of your money by yourself. Most Canadians are simply too lazy to learn how to do this.

David Amos

@Jean William YUP

 

Andrew Cavalier

Ah, they're just caught up in the excitement of the casino, er, I mean market.

David Amos

@Andrew Cavalier Methinks many truths are spoken in jest N'esy Pas?

Scott Graham

Fees are now a major component of the Canadian economy. Everywhere you turn, everything you do. And then, for good measure, the gov't taxes the fees.

David Amos

@Scott Graham Sometimes they even tax the taxes

 

Woit Regnal

Establish self-directed investment account and avoid fees..simple.

David Amos

@Woit Regnal I agree

 

Harold Peters

If you buy prepackaged fruit or veggies at a store...you pay for that service. Same w funds. So ...want to keep your money...do your own homework. Not rocket science .

David Amos

@Harold Peters True However most folks ain't got two clues about the Investment Industry. Hence they are compelled to rely on the Integrity of people who claim that they are "professionals" with no oversight whatsoever.

Methinks understanding the rules of the wicked game before one plays it is the fuel that powers the fancy rockets built by questionable people N'esy Pas?

  

Greg Gore (formerly Greggore)

Gotta love all of the fees labeled as "other"

David Amos

@Greg Gore (formerly Greggore) FYI I have been referred to by the Yankee Feds who oversee the SEC and Bankstters etc as a "Mean Motherotherer" No kidding

 

Philip Lucas

When I tried to look at account fees I get no details from TD on fees. Paying about 1% of investment value for TD management all I get is it goes to the MER's for the distributed funds.

So the FP is paid nothing?? Seems a bit odd? So the meetings, hours talking about investment strategy is free??

And CRA when I try and claim the fees paid to TD, I am told they are not eligible since the investments are registered funds?? So even the overall yearly investment strategy, the request for changes or funds in and out are all part of MER's or registered fees.

Perhaps CRA and banks and the OSC etc. can get their acts together and require costs broken down into salaries paid to give advice, fees to admin each account, fees for 3rd party investment management and all the rest.

I am tired of getting no information on what the money I pay for advice is actually for. Even MER's where little change is made to balance or add/remove assets should have the MER reduced when little active management is needed.

David Amos

@Philip Lucas Here is a tip for you Google my name and look for a pdf file uploaded within Scribd entitled "Integrity Yea Right" Study it closely and laugh then Pick up the phone Just mention my name and that of Frank McKenna's in the same sentence to the minions within the TD Bank who will not give you any details and you may get the satisfaction you seek.

 

mo bennett

don't like getting gouged? don't invest in sketchy mutual funds! how hard is it?

David Amos

@mo bennett "don't invest in sketchy mutual funds! how hard is it?"

Methinks its very hard when the government uses our CPP funds to invest in such things N'esy Pas?

 
Robert Anderson

One of the games that the professional advisers play are the sale of special F series funds that have very low MER costs. They look good, until you consider that the advisers only sell these funds to those who have an adviser account with them that charges in the order of 1% of your total investment account per year. So they claim no sales fees, low MER, no trailer fee, but they take it as an advisor fee. It ends up costing just as much as a high MER fund with trailer fees.

The solution is to stick to index funds and ETFs that have a very low total MER, no trailer fee, and no sales fee other than $10 to buy and sell. And many funds are available that do not cost the $10 to buy and sell. That is the real way to minimizes total investment charges.

David Amos

@Robert Anderson I think it is far wiser not to play their wicked game and buy certain real estate instead

 
jimmy vee

While I think its good for the industry to inform their clients that they don't work for free and just like their client everybody get paid for work done. I think its astounding that 62% of investors think the people serving them work for free. I however do not think is fair that all the details who get what is fair for the industry. After all when I buy 10 pounds of potatoes at the grocery store I don't know how much the farmer got.

David Amos

@jimmy vee "I however do not think is fair that all the details who get what is fair for the industry."

I strongly disagree particularly when people are playing with other people's money including that of the hard working farmer who grew the potatoes on my table that many people in middle made more money on.

  

 Brian Hughes

If Canadians are confused about fees then the disclosure system is clearly not adequate. Once again one has to wonder whose interests the government serves---corporate or consumer? Generally Canadian governments support corporate interests. This appears to be the case for investment fees.

David Amos

@Brian Hughes "Generally Canadian governments support corporate interests."

Methinks Canadian governments support corporate interests only After all Canada is a Corporation that reports to the Yankee SEC N'esy Pas?

 
James Robson

A fairly informative article--worth reading. But, we are still waiting for government to force banks and investment dealers to have a legally binding fiduciary obligation to each and every client. Continued absence of this essential protection exposes clients, especially those with limited understanding to predatory practises, that can ruin they and their families. And, as with the equally important absence of government pension protection reform for workers, in the wake of both the Nortel and Sears scandals, we may be waiting a very long time indeed as corporatist Lib-Con provincial and federal regimes thumb their noses at victims.

jimmy vee

@James Robson The industry does not want it and they are self regulated so I would not be holding my breath on this idea. Canada often follows other countries in regulation but in the case I expect we will be the last country in the world to join this standard.

David Amos

@jimmy vee I agree


 
Joyce Hope Shortell

Move to etfs. Lower fee structure.

David Amos

@Joyce Hope Shortell Why bother? Methinks it would be far wiser to sell everything you have in the stock markets before they take a very predicable nosedive in the near future. Then come back in after the dust settles and buy what you wish cheap. That is what the greedy Banksters do Why not ride on their fancy coattails N'esy Pas?

 
Adam Smith

How about say on pay on ridiculous executive pay?

David Amos 

@Adam Smith We can say whatever we want but they will just laugh at us. Trust that I know it to be a fact from personal experience. In 2003 while I had several lawsuits in Yankee courts about financial crimes I bought shares in a bank most people never heard of. Its auditing had been taken over by KPMG after I had made Grant Thornton quit in the 3rd quarter of reporting to the SEC. Mr Chapman the CEO of the Brookline Bankcorp at the time was paid more than the CEOs of many big Banks. Trust that he was well aware of who I was when I refused to release my proxy and spoke openly to the major shareholders of that bank in n uncertain terms. I was ignored by the bankers and their pals but within the year the bank's biggest shareholder Putnam Investment nearly lost its shirt and its is now owned by Power Corp.

Adam Smith

@David Amos

These people have even more power now that real interest rates are negative forcing risk taking.

David Amos

@Adam Smith YUP

 
Nicholas Collins

There is inflation, compound interest and these wretched hidden fees to be aware of., frankly I try and avoid all bank fees wherever possible. Good luck guys.

David Amos

@Nicholas Collins Me Too

Andrew Farmer

Like anything, "leakage" can be important. Whether it's a government budget, an investment portfolio or a house in the winter in Canada, plugging the holes can be beneficial.

I don't mind fees themselves but I want to ensure they are no hidden and are reasonable.

David Amos

@Andrew Farmer I believe that goes under the heading of buyer beware correct?

Stock market volatility may awaken investors to scrutinize account fees

Rough patch that hit markets in February may force investors to take more notice

The Canadian Press Posted: Mar 04, 2018 12:46 PM ET

Tough questions about advisory fees had been expected to emerge after the second phase of enhanced disclosure rules, known as CRM2, became mandatory last year. (John Kwan/Shutterstock)

A return to volatility on global stock markets in early February may be the catalyst needed to warn investors about the impact of fees on returns — a feat that regulators haven't accomplished so far.

"Failing investment values tend to make people scrutinize everything more closely," Dan Hallett, vice-president of HighView Financial Group in Windsor, Ont., said in an interview.

He expects more attention will be paid to how fees affect portfolio returns "especially if they're negative on the year."

Tough questions about advisory fees had been expected to emerge after the second phase of enhanced disclosure rules, known as CRM2, became mandatory last year.

• New investment rules fail to reveal some hidden fees
  

However, investors and their advisers had little cause for concern in 2017 as U.S. stocks continued a bull run that began in 2009 and continued into early 2018.

The rough patch that hit markets in February, when global markets fell by 10 per cent at times, may force investors to take more notice.

Research suggests CRM2's heightened disclosure requirements have done little to change investor knowledge about fees — and, in some cases, have created confusion.

CBC Business News

More disclosure

00:00 06:25

More disclosure6:25

A 2017 study by the B.C. Securities Commission estimated only nine per cent of investors were familiar with the indirect fees paid by third parties to firms — up from zero per cent before CRM2 was implemented.

Another 2017 study by Credo Consulting Inc. found that 62 per cent of investors surveyed thought they didn't pay for the financial advice they received — down from 67 per cent of investors surveyed in 2016.

A Mutual Fund Dealers Association of Canada report in January 2018 found that fee disclosures used by some firms could lead to client confusion due to different terms used throughout investment statements as well as instances where required definitions weren't used at all.

CRM2 only tells half the story

The Ombudsman for Banking Services and Investments is expected to offer other details in a new survey to be released in early March.

But even CRM2 only tells half the story, since annual report statements still don't reveal the portion of management fees retained by the fund company.

"Disclosing the full management expense ratios or MERs should be the requirements for funds," said fee-only planner Jason Heath of Objective Financial Partners in Markham, Ont.

An investor, for example, with a $100,000 portfolio made up of commission-based mutual funds with a two per cent MER would likely see about $1,000 in fees and charges on an annual CRM2 report statement. But the total amount of fees and charges would be $2,000 after accounting for the a fund company's portion of the MER.

CBC Business News

Going far enough?

00:00 05:52

Going far enough?5:52

While not all mutual funds include trailer fees, the ones sold through banks and full-service advisers often do and can make up a sizeable portion of investment portfolios. According to the Investment Funds Institute of Canada, there was $1.49 trillion in mutual funds as of Jan. 31 — about 31 per cent of Canadians' financial wealth.

For portfolio manager John De Goey of Industrial Alliance Securities in Toronto, the only way for investors to really understand how much financial advice costs is to get rid of embedded commissions in mutual funds altogether.

The Canadian Securities Administrators held consultations last September about whether the regulator should ban the use of embedded commissions — a move that Britain and Australia have already taken — following a report it released in early 2017 showing payment of embedded commissions raises investor protection and market efficiency issues.

The Ontario Securities Commission is expected to publish an update in late spring about how it will proceed with embedded commissions.

Investor advocacy group Fair Canada supports a ban on embedded commissions, calling it "an essential step so that Canadians can receive professional objective advice free from damaging conflicts of interest."

Canadian regulators are also taking steps to implement new disclosure regulations for segregated funds — an investment similar to a mutual fund that produces a return with an insurances policy that covers the risk — which initially did not fall under the same transparency rules affecting mutual funds under CRM2.